Correlation Between Eastman Chemical and KVH Industries
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical and KVH Industries at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Eastman Chemical and KVH Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and KVH Industries, you can compare the effects of market volatilities on Eastman Chemical and KVH Industries and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Eastman Chemical with a short position of KVH Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and KVH Industries.
Diversification Opportunities for Eastman Chemical and KVH Industries
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eastman and KVH is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries and Eastman Chemical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Eastman Chemical are associated (or correlated) with KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of Eastman Chemical i.e., Eastman Chemical and KVH Industries go up and down completely randomly.
Pair Corralation between Eastman Chemical and KVH Industries
Considering the 90-day investment horizon Eastman Chemical is expected to generate 1.51 times less return on investment than KVH Industries. But when comparing it to its historical volatility, Eastman Chemical is 1.61 times less risky than KVH Industries. It trades about 0.04 of its potential returns per unit of risk. KVH Industries is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 500.00 in KVH Industries on September 3, 2024 and sell it today you would earn a total of 51.00 from holding KVH Industries or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. KVH Industries
Performance |
| Timeline |
| Eastman Chemical |
| KVH Industries |
Eastman Chemical and KVH Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and KVH Industries
The main advantage of trading using opposite Eastman Chemical and KVH Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical position performs unexpectedly, KVH Industries can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KVH Industries will offset losses from the drop in KVH Industries' long position.| Eastman Chemical vs. SPACE | Eastman Chemical vs. Bayview Acquisition Corp | Eastman Chemical vs. T Rowe Price | Eastman Chemical vs. Ampleforth |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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